According to Decree No. 54/2017/ND-CP (the “New Decree”) guiding Pharmaceutical Law 2016 which took effect 1 July 2017, foreign pharmaceutical investors are allowed to import and sell drugs to local partners in Vietnam. This new regulation creates an excellent opportunity for foreign investors interested in Vietnam’s pharmaceutical market.
Article 24 of Decree 79/2006/ND-CP guiding Pharmaceutical Law 2005 limited the right to import drugs to manufacturers and local partners (“LPs”):
“1. Drug-producing or wholesaling enterprises which have certificates of full satisfaction of drug business conditions and have drug warehouses up to good practice standards on drug preservation shall be permitted to import drugs according to the provisions of law on pharmacy, regulations of the Health Ministry, and relevant legal provisions.”
However, this restriction was removed when Pharmaceutical Law 2016 was issued and took effect on 1 January 2017 because the New Decree guiding this law specifies the importation right is now expanded to foreign invested enterprises (“FIEs”).
Article 33.1(b) of Pharmaceutical Law 2016 states a drug business establishment can import drugs if it has the following: a physical premises; a GSP warehouse for drug storage; storage equipment; vehicles to transport drugs; quality control systems; technical documents; and personnel that fulfill Good Storage Practice requirements.
Article 44.1(d) of Pharmaceutical Law 2016 and Article 91.10 of the New Decree provide that FIEs will have the right to import and sell drugs to local partners for distribution. Article 91.12 also states that FIEs that want to import and sell drugs to LPs must register their LPs with the Ministry of Health (“MOH”) before they begin selling, as well as when they terminate their contracts with the LPs. The MOH will publish the list of LPs eligible to purchase imported products from FIEs on the MOH’s website within three working days.
The New Decree’s regulations were promulgated pursuant to Vietnam’s WTO commitments and other treaties, such as the EU – Vietnam Free Trade Agreement (“EVFTA”). Specifically, Paragraph 1 of Article 14 EVFTA (Trading Rights) states that:
“1. Vietnam shall adopt and maintain in force appropriate legal instruments allowing foreign pharmaceutical companies to establish foreign-invested enterprises in order to perform importation of pharmaceuticals [emphasis added], which duly got the marketing authorization from Vietnam’s authority.”
All of this bodes well for Vietnam’s pharmaceutical sector. Vietnam’s pharmaceutical sector has shown high growth rates over the last few years. For instance, the value of imported pharmaceutical products in the first nine months of 2016 reached USD 1.9 billion, up 16.44% from the same period in 2015. FIEs are responsible for an estimated 15% of domestic pharmacy production. These figures prove that Vietnam’s pharmaceutical business has potential market space for FIEs to take advantage of.
With the passing of new laws in a dynamic country of nearly 90 million citizens, Vietnam promises to be a fertile pharmaceutical market for FIEs’ investment.
By Net Le & Hai Ngo, LNT & Partners
Disclaimer: This article is for information purposes only. Its contents do not constitute legal advice and should not be regarded as detailed advice in individual cases. For more information, please contact us at info@LNTpartners.com or visit the website: Http://LNTpartners.com